BP blown off track by Gulf of Mexico hurricane
A massive hurricane that ripped through the Gulf of Mexico took a big chunk out of BP’s production while boosting its tax rate, the oil giant warned on Friday.
Around 100,000 barrels were lost to the storm every day as Hurricane Barry tore through the Gulf in July, forcing BP to shut down its rigs for two weeks. It also hit the driller’s tax bill by reducing production in a low-tax area, the company said.
BP will now pay around 50% of its earnings in tax during the third quarter, 10 percentage points higher than the quarter before.
US authorities have said that nearly 1.3 million barrels of crude oil production was taken offline as the storm battered the Gulf, forcing companies to briefly abandon 283 oil rigs.
BP said its expected tax rate remains unchanged at 40% over the full year. Shares dipped by 1.74% to 493.25p on the news.
Meanwhile, BP revealed that a major plan to sell off 10 billion dollars of oil fields and other assets has progressed quicker than expected after it exited Alaska after 60 years of drilling in the US state.
It will take a charge of between two and three billion dollars in its third quarter because of the divestment.
The sale, announced in August, netted the oil major 5.6 billion dollars £4.5 billion), while it raised more cash by exiting four sites in southern America – the so-called US Lower 48.
It sets the business well on the way to reaching its two-year target to divest 10 billion dollars (£8.12 billion) in assets to fund a 10.25 billion dollar (£8.33 billion) takeover of BHP’s sites in the US.
“The strong progress in delivering the programme has been driven by the agreed sale of BP’s interests in Alaska, as well as progress in divesting assets from its existing, non-BHP US Lower 48 legacy gas business,” the company said in a statement. It is reviewing more US fields.
The storm is not the first problems that BP has faced in the Gulf of Mexico, where a 2010 blowout at its Deepwater Horizon rig killed workers and resulted in one of history’s biggest environmental disasters.
Last week, chief executive Bob Dudley, who steered the company through its response to the oil spill, said he will step down in 2020. The American will be replaced by Irishman Bernard Looney, the head of oil and gas production.